"The filing of our plan is a significant step towards emerging fromChapter 11 as a stronger, more competitive company," says Joe Malugen, chairman, president and CEO, in a statement announcing the filing. "We have made substantial progress in addressing our operational and financial challenges and we are confident that the company will be well-positioned to operate profitably and create value for all of its stakeholders upon emergence."

When the chain filed for a prenegotiated Chapter 11 bankruptcy protection on October 16, 2007, it operated 4,430 stores. Faced with continuing competition from on-demand video services from cable companies, Internet-based rental companies such as Netflix, and direct downloads, the chain now operates approximately 3,650 stores in the US and Canada. It remains the second-largest video rental chain after Blockbuster Video, using the names Movie Gallery, Hollywood Video and Game Crazy.